Overhaul of Commonwealth procurement on the way, so get ready now

26 May 2017

Commonwealth agencies which run procurements subject to the Commonwealth Procurement Rules (CPRs) will need to understand the impact of the Government Procurement (Judicial Review) Bill, introduced into Parliament yesterday, on their upcoming procurements. The Bill:

  • creates new rules for investigating and handling complaints;
  • allows complainants to seek compensation from the courts; and
  • allows complainants to seek an injunction from the court

for breaches of Commonwealth procurement rules relating to covered procurements.

They will also need to review their procedures and procurement materials now.

Unless the Commonwealth entity that is the subject of a complaint has issued what is described as a "public interest certificate" under the Bill before the complaint was made, that complaint will have the effect of suspending the procurement process while that complaint is dealt with - which could add significant delay to procurement timeframes.

The Bill does not limit the remedies available to an aggrieved tenderer to those available under an agency that is subject to the CPRs' procurement complaints handling process. Instead, as we predicted last year, the Bill permits the Federal Court or Federal Circuit Court to grant an injunction and/or order compensation on application by a supplier or potential supplier whose interests are affected by conduct in contravention of the CPRs. A supplier however can only obtain those remedies after exhausting the Commonwealth entity's internal complaints process.

When the Bill becomes law: implications for procurements

The Bill is yet to be passed, and it could well be reviewed by a parliamentary committee as well. As a result, we think that it is unlikely that the changes will commence before late 2017 or early 2018.

The Bill explicitly says it will not have retrospective effect, so its immediate impact is likely to be modest. Its impact in the medium- to long-term, however, will be significant, and agencies should be preparing now

The most immediate impact will be on any procurement process which have either commenced, or are about to. The potential for delay must be factored into any procurement that could still be on foot at the commencement date and therefore potentially subject to the Act.

In addition, agencies should be reviewing their internal procurement complaints handling and investigation practices (including any related accountable authority instructions). Ensuring that an agency's complaints handling practices support both thorough and transparent investigation and timely and collaborative resolution of supplier complaints will, in our view, be crucial to limiting the number of applications made under the Act for injunctive relief and/or compensation.

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.